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Don't Retire Yet - Try This Instead · Retirement Answers

• 0:00
  Jacob Duke: Hey, friends, and welcome back to another episode of Retirement Answers. My name is Jacob Duke. I am your host as always. Today, I've got a question for you, and I want to present an idea to you that you maybe haven't thought about yet or maybe haven't seen others around you do. So the question is this, are you thinking about retiring here in 2026?
• 0:19
  Like, is this the year or maybe 2027? Either way, it's in the near future. We'll say that within the next twelve to twenty four months is the near future. But there's maybe a worry or concern for you. And it's the fact that if you decide you want to retire that you have to do it a 100% all the way and then have no more work.
• 0:38
  And then second to that question, do you feel like you have to stop and just be done? No more work, cold turkey, hey, I'm done working and now I'm retired. Does that thought ever give you a little bit of anxiety or a little bit of worry? Because what I've found here in working with people just like you in their 50s and 60s, planning out retirements and figuring out the next phase of life, I found that the idea of stopping completely just on a dime, one day I went to work, the next day I'm no longer working, might end up being the largest hurdle or mental roadblock to go through, rather than figuring out all the money stuff. Obviously, we've got to figure out the money part of it, but that emotional and mental response to I've worked for thirty or forty years and now I have to be done working.
• 1:22
  So I want to kind of give you a different alternative today. And it's this idea of a phased retirement. Where you don't necessarily stop altogether and then figure out the entirely different next thing. What I'm saying is, is what if you stopped working at the capacity that you're working today, whether it be at a time capacity, maybe you cut your time down from forty hours a week, or for some of you from sixty hours a week down to thirty, or from forty to twenty. What does it look like to continue to work just with less amount of time?
• 1:53
  Or maybe another component of that would be, what if you stopped working in such a stressful environment or creating so much stress on yourself, and you're able to continue working for longer because the level of stress you were under during that second phase of working as you transition into retirement was less stressful and more enjoyable. So that's what I want to talk to you about today, this idea of a phase retirement. I wanna talk through how this is possible and what this could look like. I wanna talk about some of the benefits of it and why many and many more people are choosing this route rather than the traditional idea of just stopping work altogether, and then moving on to the next thing. Because here's the hard part with that.
• 2:35
  It's not the same as it used to be. Retirement has definitely changed. A few things that have changed are your life expectancy. On average, we as individuals here in America are living about four years longer than we were thirty to forty to fifty years ago. So that's another component in this.
• 2:51
  The other component is that, hey, from a financial position, we most of us don't have pensions anymore. If you do have a pension, consider yourself lucky, but a lot of people are not having pensions the way that they did thirty, forty, fifty years ago. The other factor here is this, most people are not wanting to just simply retire and then not run out of money one day. They wanna retire so that they can go enjoy. So this idea of having an abundance or more than you really need so that you can do what you want.
• 3:20
  And that's just reality for us here in America today. We are consumers, whether that's a good or a bad thing. We all want more and want to enjoy and have the option to fulfill our wants rather than only just our needs. And the final thing that I've got here on my list of things that have changed in recent times is gonna be around healthcare and the fact that it's more expensive than ever. And for those of you who are trying to retire before 65, the pre 65 health insurance question of Jacob, where do I get that from?
• 3:49
  How much is it going to cost? And what if I don't qualify for subsidies? How much will my premiums be every single month? And can I afford to do that? That healthcare question, how do I meet my health insurance needs?
• 4:01
  That's the one that's holding people back from retiring earlier. Okay, so let's talk about this. And I want to dive into this really quickly, maybe give you some examples of how this could work. But think about it this way. Let's say you're you're flying in an airplane, Whenever you approach for landing, whenever you reach your destination, what do you not do?
• 4:22
  You do not just hover over the airport and then drop down. Maybe for a helicopter, do that, but not in this airplane analogy, just work with me. If you're in an airplane, a big large airplane that's traveling commercially, you've got hundreds of other people on the flight with you from New York to Los Angeles, guess what? You're not gonna just drop out of the sky onto the tarmac and say, we made it. Okay, we're here.
• 4:44
  What you're going to do is you're gonna start at 30,000 feet once you're up in the air and you're gonna slowly descend over hundreds of miles until you get down to the ground. And so what you do is you slowly approach and you're slowly going down an altitude until you touch down. Right? That slow descent, that's what I want you to focus on. Maybe that's the the way to think about this here is you're not going from in the air and then straight down to the ground and that's retirement, your final destination.
• 5:08
  What you're doing is you're slowly approaching and easing into it over time. So that's the idea of a phased retirement. Now, how does this really work in practice? Well, for many of you, you're like Jacob, my company, my boss, my whoever, they won't let me work part time, either I'm full time or I'm not. It's one way or another.
• 5:26
  I'll address that here in just a second. But for many of you, part time work or a slow transition into retirement is something that is possible. And here's the thing, I totally get that, you maybe can't reveal or your your tell your boss or your company your thoughts or intentions around your retirement date, because that may be the relationship there or just the environment isn't conducive for you showing your cards too early. I totally get it. But if you are in a position to where there is a good relationship there and they don't mind knowing that sooner rather than later, and in fact, they might would want to, you might say, hey, look, I'm planning on retiring in twelve months or at the end of twenty twenty six, or whatever date that you have on your mind.
• 6:03
  If you can let them know that number one, it might automatically, you know, throw some panic into their minds because of how valuable you probably are to your company and your role and what you're doing. So to lose someone like you is a negative thing. Therefore, they got to find a replacement and fill your role. And so if you have leverage in that regard, what you could do is you could say, hey, this is my intention. I think I'm gonna retire on x date here in the future, but I wanted to come to you with an idea as well.
• 6:32
  What if I didn't retire fully? What if I just cut back on my hours? What if I cut back on my amount of time that I'm working so I can slowly transition into retirement over the next twelve to twenty four months, rather than just stopping on a dime? And if your employer is open to that concept, first of all, I'd explore it. That's what I'm telling you to do is is maybe think about it.
• 6:51
  And if you're also concerned about, you know, what they might say is like, hey, I'd offer to train up the next person as well, so they can fill my role with excellence and you didn't have a huge drop off on your end and it worked well for all parties involved. And so for you, that offer, I'm just coming from the perspective of an employer since I do own my firm, that would be the best case scenario for me, just being honest, right? Like, tell me sooner rather than later so that I know how to fill that gap and we can do so with a plan rather than being super reactive. So from the employer side, it would make sense for them most likely to know that in advance, although maybe they don't show that or advertise that, maybe you should go with it with that leverage of saying, I'm willing to do this if you can help me here. Now, wanna talk about the benefits of that here in just a moment, but for the other folks out there that like Jacob, will not work.
• 7:42
  My employer will not allow me to work part time or half time or anything, because of the nature of my role and or the type of business I'm in. Okay, totally get it. Now, another alternative there to that would be what if you retired from this job 100%, but you immediately found or knew that you'd be doing something in a related field, or maybe an entirely different field, at least in part. So for a lot of folks, this ends up being some sort of consulting work. Maybe you are an engineer, right?
• 8:11
  And you've been working in mechanical or electrical, whatever type of engineering you've been doing for your career, and you've got a wealth of knowledge in the specifics or the nuances of what you've done. Well, guess what? That knowledge is very important and powerful. Okay. So you have leverage for yourself.
• 8:29
  Now, if your employer won't let you to slowly, go down in terms of how much you're working and your and the amount of time you work, guess what? You have the option to then say, I'm gonna be a contractor, I'm gonna be a consultant and go to different companies or firms or businesses or whoever I've normally worked with, and say, hey, look, I'm willing to consult and kind of share ideas and thoughts and what I've learned with your team and your staff and your company to make sure that y'all produce the best product or the best whatever it is you're producing, so that you benefit, but also you get to take advantage of what I know, and I get to add back to the marketplace and add back to what I know a lot about. And so being a consultant could be the way for many of you. You get to control your time, how much you're putting in and how difficult the jobs are and whether there's travel involved or not. And this role can be very powerful because yes, you're obviously, you know, continuing to work at least in part if especially if you enjoy it, but there's some leverage also in the fact that you are now a business owner, and there's also tax opportunities, and or health insurance opportunities, or different things around being a business owner that you could tap into.
• 9:39
  You can write off more on travel or expenses related to your work. You can take advantage of the fact that since you're making money and kind of stating your price, you can on your side know that, hey, I'm doing this so that I can pay for my health insurance before 65. So there are different benefits to doing the consulting route. And for maybe some of you like Jacob, I don't really care to work that hard or think very much. I don't wanna be full time, I'd rather be a clerk somewhere.
• 10:05
  I'd rather be an office administrator somewhere. I'd rather just kind of sit behind a desk, do my thing for a few hours a week and not be needed very much. Yet, I want to be in community with other people at the office or adding back in value in some sort of way. This could be an opportunity, whether it be a charitable organization, a school, a grandkids or a kid's school as a front desk worker, perhaps you could be a substitute teacher, right? Like that's something you can choose your hours and how you wanna do that.
• 10:32
  So there's so many options there for non related things that you've not done before, but you could definitely, choose your schedule around. So this idea of having a phased retirement where you stop working, at least to limit how much stress you're under and how much time you're working, is something that a lot more people are choosing to do. In fact, I've got a client down in Florida and she is doing this over an eight month period where she wanted to retire at the end of twenty twenty five. But in order to help bridge that gap pre 65, in order to make more money to pay for health insurance and make her financial plan that much more solid, guess what? She's gonna make more money over the next eight months, and she's gonna be able to train that next person to fill her shoes.
• 11:17
  And so she can see the end in sight, but she's doing it slowly. So this idea of a phased retirement or retiring slowly is something that a lot of people are grabbing onto because what most people don't want to do is just stop, they wanna kind of slowly transition. It's like this kind of hand off, if you will, rather than just quitting and saying I'm good and then figuring out what to do next. It's like, I'm gonna figure out what to do next along the way, which brings up some of the benefits here of this phase style retirement. Number one is whenever you have lower stress, you have more clarity of mind.
• 11:49
  Right? You're actually able to see the forest rather than just looking at the tree right in front of you. You can see the big picture. And so if you've got less stress on you, you're able to look like for me. Maybe it's not the traditional retirement we've all heard of or talked about, maybe it's something completely different.
• 12:04
  So you're able to see the future in some sense, you're able to see what you wanna do and figure that out because you have less stress and you can't, right now you're maybe not able to look up and take a breath and see what's ahead, you're just trying to make it through and keep pushing, keep pushing. But by having a part time or some sort of phase retirement, you can step back and just take a breath and look and see, hey, where do I wanna go? Right? Now, another benefit here is going to be the financial benefits. I already mentioned life expectancy and the fact that you could need that much more money for longer because on average, we're living four years longer than we did years ago.
• 12:39
  The fact that you also don't have this fixed payment most of the time whenever you don't have a pension, yes, you might have social security, but years ago, many people had pensions and social security and albeit they had less $4.00 1 ks dollars. So it kind of offsets but not entirely because that four zero one ks, yes, might be able to replace the pension, but the emotional response that comes with a four zero one ks rather than a pension is a lot different. So a lot of people are saying, hey, I don't have this fixed income source outside of social security, I need to have more money, which brings up the need for more flexibility, right? And so you want to have the option to do many things, you want to fulfill your wants, and I want to travel the world, I want to buy the new car and I wanna have the second home. Those things are all wants, and I've found that most people are not trying to meet only their needs of hey, I need $3,000 a month to pay the bills and have food, like that's necessary, absolutely.
• 13:32
  But a lot of people aren't retiring until they can also meet majority of their wants. Okay, so having the flexibility is very important to many people. And then if you think about how this transitions or works with this phase retirement, having income for that much longer allows your portfolio to continue growing without getting touched or tapped into as quickly. Okay, so that creates more flexibility by extending your working career. Yes, you'd be making less money, but in a perfect scenario, what you are making even in that lower income, part time work, you're able to meet your basic needs with and any of your wants would be fulfilled with your portfolio, but guess what?
• 14:08
  Those are wants not needs. And so if you don't want to take that money out for any number of reasons, you don't have to, right? Because your part time work is filling your financial needs monthly. Now, as it relates to financial benefits of this slower phased retirement, the healthcare deal is such a big one, because if you can find a way to stay on part time, thirty hours a week, twenty five hours a week, whatever the time is that you can be working, that's reduced already and continue to maintain your health insurance, that is huge, okay? That would give you a lot more comfort as you enter retirement to say, okay, I'm retiring at 60, at least going to part time and work for two more years, that gets me close to 63, and now I only have two years to really worry about this health insurance gap before 65.
• 14:54
  And so, whenever I look up, it's like, I don't really mind paying a little bit higher premium for those two years, I can stand that. Reason is, is because I'm gonna make more money over the next two to three years, and then my insurance gap is a lot lower, right? Because I've stored away some funds to actually pay for that gap when it does arrive, giving you more and more confidence to step into the unknown of retirement even with those health insurance concerns because you were planning ahead. So the benefit of having those health insurance options by working part time and still maintaining that health insurance plan through the employer is huge before 65, but then also it gives you more confidence because you're cutting down on the number of years that you have to be on a private insurance plan and have to think about those ACA subsidies and the premiums that could be there. And then finally, of the more important items here that retiring slowly or having a phased transition into retirement is that, you know, you actually have time to process and think about what's next for you and what the goal is and what's fulfilling and what's purposeful.
• 15:56
  And, you know, maybe it's not just completely upending your life and finding this new unfound purpose and saying, oh my goodness, I've got to reinvent myself. It's like, that's not what we're talking about here. What I am saying though, is that many of us, including myself, we don't know who we are without work, right? And that's not a terrible thing. I argue that we need to figure that out a little bit and speaking to myself there.
• 16:20
  But the slower retirement, finding your way slowly and just easing into it allows you time to figure out what's next and say, who am I without work? What am I going to do? What does a day in the life look like? And that doesn't have to be profound. It doesn't have to be extravagant.
• 16:39
  It can just be, hey, I'm gonna go get coffee, have breakfast, enjoy a nice walk, maybe go workout and play some tennis. Great, go do that. Try that for a little bit at the same time of doing, your part time gig and, and see if you like it or not, right? Is that something you do more of or something you could add to as you actually go into retirement full time? And so it allows you this opportunity to kinda grow into what's next, Right?
• 17:05
  You don't have to stop cold turkey and figure it out all at one time. You've got the opportunity to say, I don't have it figured out yet. And guess what? That's okay. Because I'm gonna slowly ease into this thing called retirement rather than jump into it right away.
• 17:19
  So I wanted to kind of share this with you because I found that I'm talking to more people about this kind of phased or slow transition to retirement rather than just a one to one point in time, hey, I'm done, and figure out what's next after that. Many more of my clients are doing it that way and choosing to, because of the some of the reasons that we've talked about here, but I wanted to share that with you. Maybe that's an idea for you, or maybe it's not, and that's totally fine as well. But, hopefully it's helpful in some way and gives you some sort of perspective around the fact that you don't have to do retirement just one way. There's no right way to do it.
• 17:51
  There are many right ways to do it. In fact, the only right way to do it is the way that's best for you. Okay, so we talk about this on the money side of it, where hey, tax plans and all this good stuff. All those things are great, but doesn't mean that it's the right strategy for you. I think the same thing goes for how you retire.
• 18:08
  Whether it's a one point in time cold turkey, maybe that's the best thing for many of you. For some of you, it's a slow transition. For some of you, it's this kind of easing out and actually working forever and never retiring, right? Maybe you just kind of work forever, but at your own pace and on your own, schedule. But anyway, I hope this is helpful and maybe gives you some perspective that you haven't thought of before.
• 18:27
  Thanks for tuning in to this week's episode of Retirement Answers. We will see you again next time. Hey, it's Jacob again, and I wanted to remind you that nothing discussed in today's episode is meant to be financial, legal, or tax advice. Retirement Answers is for educational purposes only. Thanks for tuning into this week's episode.
• 18:45
  I look forward to talking with you again next week.